Labor Intermediation Services (LIS) and Access to New Technologies Diego F Angel-Urdinola Washington DC May, 2013
Content 1. Overview and Conceptual Framework 2. Lessons from OECD 3. LIS in developing countries 4. Country cases 2
What do we mean by Labor Intermediation Services (LIS)? LIS are activities undertaken to improve the speed and quality of the match between available jobs, jobseekers, markets, and social/training programs. LIS intermediate or match labor supply and demand (& labor supply and social assistance). LIS ARE NOT TEMP AGENCIES!!
Conceptual Framework L.I.S. MILES framework, World Bank (2007, 2009)
Who are the clients of LIS?
What are the benefits of LIS? Reduce short-term unemployment Ease labor mobility Reduce information asymmetries Facilitate access to markets TO INCREASE PRODUCTIVITY
SERVICE CATEGORY Job search Services Labor Intermediation Services CORE SERVICES TARGET CLIENTS Job seekers TYPES OF SERVICES Skills testing or referrals to testing Profiling of clients to determine services needed Resume preparation Job counseling Phone banks for job search Job search assistance Job clubs Case management Job Placement & Brokerage Job readiness training Employers Seekers Job seekers Training providers Employers National database of job vacancies Job placement (domestically or abroad) Vacancy in/take (firms) Candidate screening (for firms) Outplacement Recruitment for select positions (firms) Assessments of training reeds/requirements Referral to private and public training providers Training directly by LIS (limited)
Labor Intermediation Services ADDITIONAL SERVICES SERVICE CATEGORY Specialized services to employers Labor Market Information TARGET CLIENTS Employers Government job seekers Employers Informal workers Training institutions TYPES OF SERVICES Human resources assessments Legal advice on employment Screening and testing of job applicants Private sector promoters/liaisons Staff training guidance Provide data and analysis on labor market trends Provide information about free-lancing opportunities Provide information about market prices Referrals to other social services Job seekers Workers Administration of UI benefits or referral to UI Referral or coordination with social services Referral to self-employment programs Referral to training services
Institutional Arrangements for the Provision of LIS Public Monopoly National PEA with private competition Public-Private Partnerships Autonomous service with tri-partite actors Competitionbased network with public funds Tunisia (2013) Costa Rica (2003) Portugal (1989) Syria (2010) Finland (1994) Austria (1004) Egypt Panama Colombia France Brazil Many OECD Colombia Morocco Turkey Lebanon Peru Chile Germany Netherlands Half of all OECD countries Australia UK
As % of GDP Expenditures on LIS 4.50 4.00 3.50 Total LMPs LIS 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Source: Eurostat Year 2010
Expenditures on LIS 30.0% Expenditures on LIS as % of total expenditures on LMPs 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Source: Eurostat Year 2010
Expenditures on LIS 4,500 Expenditure on LIS per job-seeker in 2010 (In US$ constant PPP) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - Source: Eurostat Year 2010
Content 1. Overview and Conceptual Framework 2. Lessons from OECD 3. LIS in developing countries 4. Country cases 13
Lessons Learned from OECD Profiling Performance Monitoring Performance Contracts Activation and Referrals 14
PROFILING Profiling is a system for identifying the characteristics of job seekers and tailoring available labor market programs to job seekers needs. Is necessary because resources for providing reemployment assistance to the unemployed workers are limited Statistical methods are generally used / preferred. Client Description Jobless but Job Ready Jobless at risk for medium term unemployment or underemployment Jobless with high risk for longer term unemployment of underemployment Orientation Placement services only Placement, plus counseling, and shortterm training. Individualized training plans, social assistance (individualized follow-up)
United States Worker Profiling and Reemployment Services (WPRS) U.S. was the first country to use targeting on a program-wide basis. Targeting models were introduced in 1994. WPRS program now operates in all states. Most states use statistical profiling models and logistic regressions estimation Models cannot use recipient characteristics related to equal opportunity provisions (e.g., gender, ethnicity, race, disability status, and age). 16
Variables Used Most in Profiling Models Tenure with Prior Employer Montana Wisconsin Pennsylvania Hawaii Yes Yes Yes Yes Education Yes Yes Yes Yes County of Residence Yes Yes Yes Yes Industry Yes Yes Yes Yes Occupation Yes Yes Yes Amount of UI/social Benefits Yes Number of Prior Employers Yes 17
How Does Profiling Work? The statistical profiling mechanism places all profiled workers in an array according to their likelihood of exhausting their UI benefits Probability of exhausting benefits falls between 0-1 States refer to service/intervention according to the score. 18
Example: Selecting top 10% profile score # clients 0.98 3 0.95 2 0.92 5 0.89 6 0.86 2 0.85 5 0.82 5 0.79 2 0.69 3 0.66 5 0.65 5 0.62 6 0.59 5 0.58 4 0.57 4 0.45 7 0.41 8 0.39 3 0.35 4 0.31 5 0.27 5 0.23 6 TOTAL 100 In this case, 10% of clients have a profiling score (probability of exhausting benefits) of.92 or higher. 19
How Does Profiling Work? Depending on availability of funds, state agencies refer a specified number of claimants to reemployment services each week. Reemployment services are divided into six categories: 1. Orientation (.1-.2) 4. placement services (.5-.6] 2. Assessment (.2-.4] 5. job search workshop (.6-.7] 3. Counseling (.4-.5] 6. referral to training (.7-1] 20
PERFORMANCE MONITORING Inputs Activities Outputs Results Long-term objectives E- Platforms Staff Budget Training Intermediation Counseling Training plan completed Vacancy filled People referred Human capital increases The person finds a job Employment quality User satisfaction Unemployment decreases Productivity increases The standard of living rises Program implementation Results-based monitoring Focus on Results 21
Performance Monitoring System Data Collection is Fundamental Vacancies filled with active involvement of the PEA. User satisfaction. Performance indicators 3, 6, 12 months after program completion: Job Placement Rate: The share of beneficiaries who complete training in quarter t who are employed in quarter t+1. Job Retention Rate: The share of beneficiaries who complete training in quarter t who are employed in both quarter t+2 and t+3. Average Earnings: Average earnings in quarters t+2 and t+3 for those employed in quarter t and who retained employment in these quarters. Adequacy Rate: The share of individuals who complete training in quarter t who are employed in quarter t+1 in an occupation compatible with the training provided. Underemployment Rate: The share of individuals who complete training in quarter t who are employed in quarter t+1 in a work that requires a lower education profile. 22
Performance Monitoring System Components necessary to develop a PMS: Survey of post-training outcomes used to measure the performance of service providers as well as to evaluate the impact of the training programs. Surveys may include the entire universe of trainees or a representative sample. Data on Outcomes (Administrative data and survey) Data on Earnings (SSI) Generally collected for tax purposes. Data generally collected quarterly by a public entity from firms. All firms are obliged to report. Data on Services (Service Providers) Data on training services. Collected at registration and by training service providers during training. Data describes the beneficiary, the training program, and placement outcome.
Country Case-Studies (Performance Indicators Collected) USA Workforce Reinvestment Act For Adults Placement rates Retention rates Earnings For Youth Insertion rates Share of beneficiaties who go back to school Share who obtained a diploma Evolution in cognitive skills Turkey ISKUR Beneficiaries Placement rates Retention rates Average earnings Share of vacancies filled (out of existing vacancies) Programs and Providers Program entry Program exit Placement rates Budget allocation vs. actual expenditures Per-capita training cost Insertion costs Average earnings
Performance Contracts Contract design with LIS providers can include payments by objectives (i.e. X% job insertion rate). Many countries have successfully introduced contracting systems where payments to private providers of LIS are dependent on insertion, placement duration, and relevance.
Country-cases Germany: placement vouchers entitle job seeker to use a private agency. If the voucher leads to employment, the agency receives a pre-determined percentage of the payment at insertion and the remaining percentage six months after placement (Schneider 2008). UK (Jobs Centre Plus): provides payments to contractors depending on : (i) job outcome (off-flow from unemployment assistance into employment) and (ii) sustainability of jobs (customer still being employed after 13/26 weeks). Australia: Service providers are offered incentives through payment for placing jobseekers in work. Payments for the more difficult to place are higher than those for short-term unemployed clients.
Content 1. Overview and Conceptual Framework 2. Lessons from OECD 3. LIS in developing countries 4. Country Cases 27
Developing countries have different Regulation bottlenecks still exist contexts Public Employment Agencies have limited financing and institutional capacity Information about LMs is scarce Coordination with the private sector is limited Informal employment is prevalent Migration is frequent Number of registered job seekers, 1000 Total number of PEA staff Number of PEA staff in contact with jobseekers and employers Staff caseload*** Ratio of frontline counselors to Total PEA staff (%) Egypt 895.1 1600 1550 577 97 Jordan 28.0 133 63 444 47 Lebanon 12.2* 32 10 1222 31 Morocco 517.0 547 343 1507 63 Syria 1703.8** 397 120 14199 30 Tunisia 280 1200 850 329 71
Policy Orientations for Developing Countries Promote Results Based PPPs Develop Profiling and P.M. systems Promote system integration Provide services to informal / migrant workers Liberalize and ease regulation bottlenecks for the provision of private intermediation services (e.g. Tunisia) Sub-contract with private providers using performance based contracts (based on placement rates) for provision of training and intermediation services Develop profiling systems (easy to do an inexpensive) Adopt PMS systems to monitor performance Develop periodic socials audits and user satisfaction surveys; Consider giving performance based bonuses to staff Promote one-stops shops for social services, unified registry, program consolidation Use LIS as strategies for referring beneficiaries to other training and social programs to Provide information about job opportunities for informal workers Provide information about markers Consider developing programs for migrants (particularly relevant in MENA and LAC) Use ICTs / vouchers to foster intermediation.
Content 1. Overview and Conceptual Framework 2. Lessons from OECD 3. LIS in developing countries 4. Case studies 30
SAMASOURCE (INDIA, KENYA) Samasource s proprietary technology platform, the SamaHub, breaks down digital work from large companies into small tasks, or microwork, that can be completed by women and youth with basic English skills and a few weeks of training at our partner centers Samasource works with in-country partners to recruit women and youth formerly earning below a local living wage, as determined by the Fair Wage Guide. These recruits receive 2-4 weeks of computer-based training on the SamaHub, including English and soft skills. Workers stay in our program for an average of 8-12 months, after which they move on to more advanced employment within their ICT center, another employer, or return to school. To date, Samasource has connected over 3,000 people to $2 million in living wages across 9 countries 88% beneficiaries report the ability to find a better 90% report same or better happiness
BABAJOB (INDIA) Babajob.com is a web and mobile start-up dedicated to bringing better job opportunities to the workers in the informal sector (cooks, maids, security guards, office helpers, etc.) by appropriately connecting the right employers and job seekers via the web, mobile apps, SMS, the mobile web and voice services. 1+ million open positions listed from 70,000 registered employers, including many of the largest low-end employers such as Coffee Day, Yum Brands (Pizza Hut, KFC), Dustbusters (25,000 housekeeping staff). 500,000+ job seekers registered to date: 60,000 active / 30,000 new job seekers in Sept 2012. Hired job seekers earn on average 20.1% more + reduce their commute times by 14 minutes per day. 1.5 million job alert SMSs and 2.5 million mobile and web page views per month.
Souktel (Palestinian Territories) Created in 2006, Souktel promotes the use of mobile phone to link people with jobs, thus reducing information asymmetries and frictional unemployment in selected communities. In the Palestinian Territories, Souktel is serves 10,000 jobseekers and 200 employers daily. 84% of the beneficiaries experienced a reduction in job-search time from 12 weeks to less than 1 week 64% report higher monthly incomes as a result of jobs sourced through the service. Employers who use Souktel's services reported a 50% or greater reduction in hiring costs and time
INFITAH (MORROCO) Infitah was launched in 2008 with a focus on international intermediation, seasonal labor provision, and circular migration. Program financing was $4.3 million from January 2008 to February 2010. The majority of beneficiaries were female workers who performed farm labor (such as strawberry picking) in Spain and France. Workers have to be between 18 and 40 years of age and in very good physical condition. They must be from rural areas and have young children (up to 14 years old) whom they must leave at home as a guarantee that they will return to Morocco after the employment period is over. Almost all (95 percent) of the women who participated in the program finished their contracts and returned. In 2009, 85 percent of female beneficiaries felt more self-assured after participating in the program 70 percent reported that their income improved
References Angel-Urdinola, D; Kuddo, A; Semlali, A. (2013) Building Effective Employment Services for nemployed Youth in the Middle East and North Africa. Directions In Development. World Bank. European Commission (2009). The Role of the Public Employment Services Related to Flexicurity in the European Labour Markets. VC/2007/0927, European Community, Brussels. Mazza (2003). Labor Intermediation Services: Considerations And Lessons For Latin America And The Caribbean From International Experience. http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=355081 Kuddo, A. (2009). Employment Services and Active Labor Market Programs in Eastern European and Central Asian Countries. Social Protection Discussion Paper 0918, World Bank, Washington, DC. Lippoldt, D., and M. Brodsky. 2004. Public Provision of Employment Services in Selected OECD Countries: The Job Brokerage Function. In Labor Exchange Policy in the United States, edited by D. E. Balducchi, R. W. Eberts, and C. J. O Leary, 211 48. Kalamazoo, MI: W. E. Upjohn Institute. Martín, I. 2010. Labour Markets Performance
Thank YOU